KARACHI: The federal government’s domestic debt significantly declined in the first quarter of 2026-27, reversing the trend in the preceding year.

The latest data posted by the State Bank showed that the total domestic debt stood at Rs57.757 trillion at the end of the first quarter on Sept 30, down from Rs59.393tr on June 30, marking a decline of Rs1.636tr in a single quarter.

Revenue has increased each year, while the government reduced the fiscal deficit in FY26. With the country in an IMF programme, the government is tightening the deficit further this fiscal year.

Recently, Planning, Development and Special Initiative Minister Ahsan Iqbal said the fiscal deficit narrowed to 2.6pc of GDP in FY26, compared with 5.4pc in FY25, marking the lowest fiscal deficit recorded in two decades.

SBP data showed that the government’s net retirement of scheduled-bank debt rose sharply to Rs1.847tr in July-October FY27, up from Rs45bn in the same period last fiscal year. This indicates that debt repayments exceeded new borrowing.

Borrowing through the long-term Pakistan Investment Bonds (PIBs) declined by Rs1.756tr to Rs33.543tr at the end of the first quarter of FY27, which appears to reverse the trend. The government has long emphasised long-term bonds rather than short-term borrowing.

Borrowing through short-term Treasury bills also declined by Rs1.163tr to Rs9.640tr in the first quarter of FY27.

External debt increased in rupee terms from Rs24.2tr on June 30 to Rs24.9tr on Sept 30, a rise of Rs700bn.

Over the 12 months, total domestic debt rose by Rs4.331tr to Rs57.757tr on Sept 30. The increase was concentrated in FY26, not FY27.

Published in Dawn, November 14th, 2026